AUD/USD lost ground for a fourth successive week as the pair is precariously close to the 0.68 level. There are five releases in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
- NAB Business Confidence: Tuesday, 0:30. Business confidence in the economy remains weak, as the slowdown in the Chinese economy has hurt the Australia economy. The indicator slipped to zero in November, down from 2 pts a month earlier. Will we see a rebound into positive territory in December?
- MI Leading Index: Tuesday, 23:30. The Melbourne Institute indicator has been steady, with three straight readings at -0.1%. It is based on 9 economic indicators. We now await the December release.
- Inflation Reports: Wednesday, 0:30. Consumer inflation is released each quarter, magnifying the impact of each release. The headline release came in at 0.5% in Q3 and is expected to tick up to 0.6% in the fourth quarter. Trimmed Mean CPI, which excludes the most volatile items included in CPI, is projected to stay unchanged at 0.4%.
- Private Sector Credit: Friday, 0:30. Business and consumer borrowing levels remain weak, which reflects weakness in consumer spending. After back-to-back gains of 0.1%, the forecast for December stands at 0.2%.
- Chinese Manufacturing PMI: Friday, 1:00. The manufacturing sector has stalled, with two consecutive readings of 50.2 points. These readings are barely above the 50-level, which separates expansion from contraction. Little change is expected in January, with an estimate of 50.1 pts.
AUD/USD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 0.7250.
0.7165 has held firm since early April.
0.7085 has been a resistance line since July. This is followed by 0.7022.
0.6960 has acted in resistance since the first week in January, when AUD/USD went on a sharp slide.
0.6865 (mentioned last week) switched to a resistance role after considerable losses by AUD/USD last week. It is a weak line.
0.6744 is providing support.
0.6627 has held in support since March 2009.
0.6456 is the final support line for now.
I remain bearish on AUD/USD
The Aussie continues to lose ground in January. The coronavirus in China has spread outside of the country, and investors are snapping up safe-haven assets, while staying away from riskier assets such as the Australian dollar.
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